The Next Hundred Million: America in 2050

Introduction

JOANNE MYERS: Good morning. I am Joanne Myers, Director of Public Affairs Programs, and on behalf of the Carnegie Council I'd like to thank you for joining us.

Today I'm delighted to say that amongst the doomsday scenarios put forth by some pundits, who are fixated on the inevitable decline of America, we have with us a voice, heralding from the West Coast, to offer us an intelligent forecast for the future. His name is Joel Kotkin, and he is our speaker.

As a reading of his bio indicates, Mr. Kotkin is an internationally recognized authority on global economic, political, and social trends. He will be presenting his latest findings from The Next Hundred Million: America in 2050, in which he explores how our nation, with an additional 100 million people, will evolve in the next four decades.

Anyone who has ever wondered about tomorrow, or planned for next week, is a futurist at some level. Still, there are some people who forecast probable futures as their vocation. Visionary leaders like Mr. Kotkin are the builders of a new dawn, working with statistics, imagination, insight, and boldness to tell us what we can expect in time to come. Their eyes are on the horizon, not just on the near at hand, and they see the big picture as they think strategically about tomorrow.

In The Next Hundred Million, our speaker provides a very sunny forecast for our country. He bases his optimism on several things, including our nation's sokojikara, which is a Japanese expression for self-renewing power, which Mr. Kotkin says will be enhanced by America's unique combination of high fertility, great diversity, and enormous physical assets.

Our country's ability to overcome both the inadequacies of our leaders and our own foibles are the qualities that will help us to succeed. He writes that, despite our current economic difficulties, the United States will emerge by mid-century as the most affluent, culturally rich, and successful nation in human history.

Although there will be challenges, demographic resources will give the United States an edge over its European rivals and the rising Asian giants, who Mr. Kotkin sees as being constrained by shrinking work forces, rapidly proliferating social welfare commitments, and environmental challenges.

But America is different. Nourished by mass immigration, our proven adaptability will be the tool that will enable us to reign supreme over an industrialized world beset by old age, bitter ethnic conflicts, and erratically functioning economic institutions.

While the United States is growing at a record rate, with our population poised to hit 400 million by 2050, that means 100 million more of us using the highways, breathing the air, and attending schools. Even so, Mr. Kotkin sees the looming population boom as the strongest indicator of our country's long-term economic strength, making us more diverse and more competitive than any nation on earth.

It is unlikely that we will be around in 2050, but our children and grandchildren will be. What will America be like in 40 years from now? For a clear snapshot, please join me in welcoming our speaker this morning, Joel Kotkin.

Thank you for joining us.

Remarks

JOEL KOTKIN: Thank you very much.

One of the things that I was thinking about when I first heard that I was going to speak here is the word "Carnegie" to me is associated with driving in the countryside of Pennsylvania or North Dakota and seeing those libraries. If you want to talk about what we need to do in the next 20, 30, 40 years, it won't be necessarily the same brick libraries that were built in the early part of the 20th century, but this is the kind of forward-looking thinking that made this country.

My background is really in history. We have been through many of these periods before, these periods of depression. It's very interesting if you read accounts from the 1850s, 1860s—there was a lot of reason to be concerned during the period towards the end of the 19th century and beginning of the 20th with the tremendous labor unrest; people thought that immigration was going to destroy the country.

I remember, doing the history of immigration, what you had. First they were worried about the wild—I'll try to insult everyone by the time I'm done—there were the wild hordes of Irishmen and they were going to ruin the country, then you had the Germans coming in and they were going to Germanize us, and then of course the Italians came and they were called the Chinese of Europe, which was, I guess, supposed to be an insult—although I was thinking "Well, they both really cook well"—and then, of course, it got worse.

My grandparents arrived, and I think they decided of all the Jewish immigrants coming to Ellis Island, about 82 percent were mental defectives. Now, that may explain my thesis here.

But I think it also tells us a lot about what is happening in the country right now, which is a very interesting period. I think the declinism is probably greater now than at any time, even going back into the 1980s.

That was when the Japanese were going to take over the world, if you remember that. I don't hear that line very often. In the book I actually have quotes—you know, "Japan is becoming the leading world power; we should fade out in a graceful way."

I happened to have been working in Japan at the time. I wrote a book with a young Japanese woman. We just did interviews. The demographics were already becoming pretty clear, what was happening in Japan by the mid-1980s. Meanwhile, people were making a lot more money with their books running around saying the world was coming to an end and Japan was going to take over the world.

Of course, now it's different. It's China. Now, China is a different thing than Japan. In my earlier books I did talk a lot about China, because I spent quite a bit of time there. I think it's a different kind of challenge than Japan or Europe were. But there are a lot more weaknesses there than we might think.

Right now, though—I was looking at some polls—about only a quarter of adults think that their children are going to have a better life than they have. That's really scary in my mind. Since I've got two kids, I'm particularly concerned about it.

I think there is a sense of inevitable decline, because you've got really two things happening. You have the conservatives, who have been traditionally been the "Morning in America" crew, but now that the Democrats are in power, obviously the world must be getting much worse. And most liberals and progressives, or whatever they call themselves this week, have been signed on to the idea of decline for a long time, and they even sometimes don't like the idea of the United States being a preeminent country; it offends their sensibilities.

The other thing I thought was really interesting is a plurality of people in the United States—more Americans think China is now the dominant economic and political power in the world rather than the United States.

So it just shows you what kind of mood I'm writing into here—and there are good reasons. The economy is very much disturbed. I come to New York quite often and I'm very cognizant of what's happening when there are empty storefronts, and certainly there are a lot of problems. Even the subways are less crowded.

There are always, of course, the "Riders of the Apocalypse," the environmental disasters, and the rise of the terrorist organizations, the multiple wars we're in, and of course the complete political dysfunction. So there's a lot to be concerned about.

But again, I think this pessimism is something that we've seen for a long time. It seems to be part of our culture.

If you go back to the 1930s—now, I'm not quite that old—but if you do the analysis of the 1930s, there were many Americans who felt that either Stalin's Russia or Mussolini and Hitler had a better system.

Just like when I hear some of our famous New York Times people saying, "Oh, if we could only be like China." I'm saying: "Really? Is that our goal? Is that what we want to do? Do we want to have a top-down government?" I guess they probably don't want the Communist Party; I guess they'd want the Harvard faculty—and I'm not sure which is worse. I'm speaking at the Harvard Club later. I went to Berkeley—I don't know if they'll like me. [Laughter]

But basically, I would say that these prognostications are pretty wrong.

When I worked in the late 1980s on this issue, it was really interesting, because everyone said, "Japan's going to take over the world" or "Europe's going to be the dominant power." And then I gave the reasons why [not] and turned out to be basically right. And I think I'm going to be basically right this time. Of course, I may be dead and buried by the time anyone agrees with me.

How do I come up with this bizarre—to some people—analysis? I think there are several things.

One, the United States is the most ingenious country in the world. We may screw up on a lot of levels, but on the idea of creating new ideas and services we're still pretty well in the lead. There really is no global counterpart that matches, let's say, Hollywood, Silicon Valley, even Route 128. And of course, in terms of doing fancy footwork, you can't rule out Wall Street—but maybe we won't want to talk about them.

But I think the incredible importance of demographics—you know, they say demographics is destiny. That's true.

It's really interesting. I got up ridiculously early this morning and I was reading George Will in RealClearPolitics. Sometimes I like what he writes, sometimes I don't. He was writing about the projections of China, that we're going to be all old and the Chinese are going to be young. That happens not to be what the demographics are. I will talk a little bit about China a bit later.

Of course, the fact of the immigrants. The immigrants are what make this society go. They keep reimagining America every time you go there. I can now go, let's say, 15 minutes from my house, go to a place called Arcadia, and it's like the suburbia of mainland China in Los Angeles—I mean one restaurant after another, one store after another, one bank after another, and then a huge computer industry built around assembling things coming from the Far East.

So there is this constant reinvention going on, which I think is incredibly important, and will be more important globally, because—I wrote in Forbes earlier this week that it makes America into what I call the multiracial superpower. There is no other country that is large, that has a big population, and has this makeup.

The only two countries—I call them to be both similar to us, what I call "the countries of aspiration"—are Canada, as I discussed with you earlier, and Australia. Those are the other countries that people are going to, and for some of the same reasons. Of course, I have to be particularly favorable to Canada since I'm married to a Canadian.

But I think the other thing that is going to be very critical and tends to be left out of our discussion—some work I'm doing now will go more into this—is the United States is an incredibly rich country naturally. I mean no offense, but if you live in New York and you live on this island [Manhattan], you don't realize that out there is the richest farmland in the world, and it is enormously productive. It is so productive that it now produces twice what it did at the end of the Second World War on considerably less land—which is, by the way, why we have more forest land than we've had in a very long time.

And energy. Now, that's a very interesting point. I think the president—and we could certainly discuss this—the president is going to have to make some pretty serious choices.

The United States and Canada together have the second-largest concentration of energy resources in the world, a lot of it in natural gas. I think natural gas is the most reasonable short-term solution to our energy needs.

And we have all the basics for the renewable fuels, which I think is something that I think the president has to think about phasing this in 20 or 30 years instead of trying to change it so quickly. I think we need something intermediate. We have all the things like solar and wind.

I always got a kick out of the fact that Germany spent so much money on solar power. I never saw the sun, so I don't know how you have solar power without the sun. And we are very big on the wind side. The part of the country I do a lot of work in, the Great Plains, has been called "the Saudi Arabia of wind." And I can tell you it is cold.

I was reading a story in The New York Times. They were in this village in far northern Canada where they're testing aircraft. They said, "It even gets minus-40." Well, you know, I've been in minus-40 in Fargo.

But the fact is that there are lots of natural resources, and the United States is the only large country with large numbers of natural resources.

This is where I came up with—reading a Japanese columnist named Fuji Kamiya—he called it sokojikara [resilience], that that was the thing that America had. He was predicting, at a time when many Japanese believed that they were about to take over the world—he said: "You know, I'm not so sure I'm going to be on this."

United States history is to screw up and then get it right. We definitely screwed up. I mean even in the run-up to the Second World War, the run-up to the First World War, the Cold War, in every case we bumbled our way to success. That's what I think democracies are supposed to do.

I think we've had this sort of self-renewing power all through our history. You know, if you read accounts in the 1950s and 1960s, even into the 1970s, there were many who said that the Soviet Union was going to at least be equal to the United States if not ahead. And of course, there were a lot of reasons for saying this. One was to scare people, to increase defense spending, also because there were many people, particularly in academia, who thought that a Soviet system, with that kind of hierarchy, would be a really good thing.

Now, all these critiques, I think they often point out very important things, and they're useful because there are things, let's say, with education, with energy, where we really do want to make some significant changes. So I don't say the critics should all be put in the gulag. I mean I think they are obviously very important. I'm more likely to be put in the gulag.

But the thing I want to really focus on the most is the most amazing statistic, and which really started me on this book, is the fact of our population growth. When President Kennedy was elected in 1960, we had 200 million people. Now, there were many people throughout the 19th century and the early 20th century who said we'd never support 100 million people, we couldn't support 150 million people.

Well, now we have 300 million people and we're going to have 400 million in 2050. Now, some people say it will be as high as 500 million. Personally, I think the recession will slow down the birth rate. As the country gets a little bit denser—I don't think it will get massively denser, but as it gets denser, people will have less children. The country is more urbanized. There will probably be a little bit less children. So I'm taking 400 million, which would be what you would call a lowball estimate. I always found it better to be conservative than not.

But look at some of these statistics.

The U.S. fertility rate, the number of kids per female, is about 50 percent higher than Russia, Germany, Japan. It's considerably higher than China, Italy, Singapore, Korea, and virtually every part of Eastern Europe. It's really interesting. With the amalgamation of Eastern Europe, their birth rates are now some of the lowest in the world. Part of the thing is that the communist state, for all of its problems, did provide much support for having children, and they had that quasi-Maoist notion that more children would make the country stronger. I think it depends on what you do with those children.

And then, of course, we have immigration. Immigration has slowed down. Will it continue? I think it's inevitable that it will continue, and particularly in terms of those who are educated. We get about half the educated immigrants in the world, and the vast majority of them are still staying. I mean some go back for a while, and then they become sometimes little ambassadors for the United States. But in many cases they stay.

And of course in many cases, particularly with the Chinese, they will move back to China for the economic opportunity, keep their wife and children in the U.S.A., like a friend of mine who did that.

I said, "Well, what happened when you said to your kids, 'We're going to move back to China'?"

He said, "No way, Jose." He was a good Californian.

So let's put this in a very different situation. I'm not arguing here, as some conservatives do, that the U.S. civilization is superior to the European or East Asian. I just think they're different and they have different trajectories and, therefore, you have to look at things differently.

One of the most amazing contrasts was the Soviet Union. When I think about it, neither of my children were born when the Soviet Union existed. I really am sorry I didn't keep some rubles, some of those old rubles with Lenin. It would have been a good collector's item. But who would have expected?

Thirty years ago, Russia was the core of a vast Soviet empire that was more populous than the United States. Today, even though it has great energy resources, with their low birth rate and high mortality, it's estimated the population will drop by 30 percent by 2050, to less than one-third that of the United States. So we're really talking about enormous change.

Even the prime minister or czar, whatever he is, Vladimir Putin, has talked about the serious threat of turning into a decaying nation.

Russia may be very interesting. I'm starting to do more work on a global projection. I don't know what's going to happen in a country with enormous natural resources and a shrinking population. It will be interesting to see.

But I think the thing that we want to most focus on is what's happening in East Asia.

If you look at history, one of the things you'll see is countries with large, expanding work forces, people in their late 20s, early 30s, those are the ones where you get a tremendous forward push. After the Second World War, there was a real expansion throughout East Asia of the population.

So you read accounts, let's say, about Korea in the 1960s and 1970s. Now, remarkably, their per capita income was about that of Mexico's. Of course it's considerably higher now. But the problem was overpopulation, there were too many children. Now we're seeing something very different.

China: I did a seminar called "The History of the Future" where I teach at Chapman University in L.A— and a Chinese student of mine did a really interesting study of Chinese fertility.

This tells us something about why we shouldn't allow governments to have too much power. Mao Zedong said "have as many kids as possible." So they had this enormous increase in their population that Mao was promoting. Then Deng Xiaoping took power and he said, "Oh my God, what have we got here?" and he went to a one-child family.

Now, what happens is all these things that you'd never expect. One of the things is as the one-child family kicks in, in the short run it has been very, very good for China. Over the long run it may not be so good. By 2050, about 30 percent of the Chinese population will be over 60 years old. Remember, this is a country with no social security system at all. And of course, since you only have one child per family, not so many people to protect your kids.

The other thing that my student did was talk about the tremendous disequilibrium of boys and girls in China. I think that's a really scary issue. She actually got a kick out of it, because she was talking about in Chinese families the boys always had the power and women were not treated so well. But she says now increasingly it's the Chinese women who have the advantage because they've actually got large advantages in the marriage market.

Right now, though, there are already about 24 million more men than women in the younger cohorts. I don't know where that goes over time, but that seems really scary.

I went with my wife to a Chinese New Year party with Chinese friends of ours in Los Angeles at a restaurant. There was a huge banquet hall. There must have been about 300 to 400 people. These were all people who had adopted children from China. Every single one was a girl. As far as I'm concerned, as a good red-blooded male, keep bringing them, because I think it's great. I mean these women are fantastic, and what they're going to do, and all this tremendous human capital that we're going to have.

Then my student started to say, "Well, what's going to happen to these Chinese men, particularly those who are not well placed and are going to have a very hard time finding a mate?"

I said, "Well, we could always invest in prostitution and pornography, and maybe that will help."

So basically our work force growth is going to drive our economy. How we accommodate that work force growth is incredibly important. That's why my orientation is: how do we figure out how to grow our economy because we're going to have more people?

Now, our historic rivals are going to be in a somewhat different situation by 2050. Our population 15 to 64—and, of course, I think if we look into the future, we'll see people in America will be working into their 70s and 80s. I certainly will be. Since I've got a five-year-old, I'm doomed.

The work force in China will actually peak in about 2030 and their population will probably start to go down. But their growth rate in their labor force will be about negative 10 percent. That's not necessarily a bad thing, but it's just a comparison.

The European Union will be down 25 percent, Korea will be down 30 percent, and Japan will be down 44 percent.

Now, we have never really seen anything on this scale. There were some similar things that happened at the end of the Roman Empire, where the countryside, particularly in Italy, depopulated, and it wasn't such a pretty picture.

If you think about what these countries are going to be like—we're going to have problems with Social Security and an aging population, for sure, but in many countries—for instance, in Japan, it will be about 35 percent of the population over the age of 65; we'll be somewhere about 20 percent; Germany will be in the 30s as well. So, although we have challenges, serious challenges, with a large aging population, although I think there are many more benefits if we do it the right way, I think that these other countries are going to be in serious trouble.

They also have another problem, particularly in Europe and in Japan, but most particularly in Europe, which is that it's very difficult to work past a certain age. And you have a social welfare system in Europe which—why should you work after a certain age?—whereas older Americans are going to be pushing that rock up a hill until they are ready to go six feet under. So this vitality, if you want to put it that way, will drive our resilience over the years.

We'll also have what I would call a second boomlet, probably at the end of this decade. What we call the Millennial Generation, born in 1983 to 2003, they will start to enter the era of buying houses and having children somewhere at the end of this decade. So I think we'll have a bit of a flattening out, and even a decline, in the population getting into their 30s, and then you will see a pretty big spike. That will really transform the society. I think we're in for a rough five to ten years probably ahead of us, but if we can manage to get through that reasonably well, I think we'll be in good shape.

Then of course, the question is: Why is America so weird? Why is a country at this level of affluence still pushing out babies? There's a lot of reasons why I think that may be.

A demographer friend of mine went to Japan. They said, "Professor Fry, how are Americans having all these kids?"

When Bill told me the story, I said, "Well, if they have to ask that question, they're in more trouble than I thought."

I think there are lots of causes.

One of them has to do with the quality of life and space.

I went to a monastery in Korea and I asked this monk, "Why are Koreans not having children?" because they have a very, very low birth rate.

He said to me, "Well, think of it this way. Housing is very expensive in Korea. Almost everybody lives in an apartment. They are very small spaces. You work like crazy. By the time you're 40, you buy a little, one-bedroom apartment. You are commuting 40 to 45 minutes in a crowded train to the center of the city. You're going back to an apartment. Probably not likely to have kids. It's just too much of a pain."

Generally speaking, once you are educated, high density will reduce your population. Now, in the case of immigrants, like my grandparents, they didn't know any better. They had five kids and they lived in two rooms in Brownsville. What did they know? But the next generation, educated, if they're living in densities, that will greatly reduce the number of kids.

Americans, at least until now, live mostly in low-to-moderate densities. If you were to break down the United States population, it's about 60 percent somewhat in the suburban environment, about 20 percent urban, about 20 percent rural.

These are very attractive things to many immigrants. I mean if you want to see where are immigrants moving, for instance, in Houston and Los Angeles and here in New York, it's generally to the suburbs. They are more likely to have kids, more likely to be married, so they are more likely to be moving either to the outer boroughs or further out.

I think another factor is religion. I think people who have some sort of spiritual faith, at least of a fairly traditional kind, will tend to be more likely to have kids. I mean every study will show you that there are more children in religious families. You can take it to the absurd ends of being Mormons and having ten kids, or Orthodox Jews in my neighborhood, who certainly tend to have a lot of children. But I think overall being part of a religious tradition takes you away from, "Well, if I have a kid, my per capita income is going to drop dramatically." You're thinking about something else. And also you're thinking about passing on an ethical and historical culture to your children, which is very important.

The Pew Study shows about 16 percent of Americans think religion is important. In France it's 11 percent, in Japan it's 12 percent, in Russia it's 14 percent, it's 25 percent in Korea, and 33 percent in the United Kingdom.

But I think it's something much more than just religion per se. I think it's some sort of spiritual decision to make that commitment.

If you talk about leaps of faith, I think having children is the biggest leap of faith you could possibly have. And I think it is the most distinctive element of our society. We don't necessarily do such a great job with them, but we have them.

One novelist wrote recently that in having children, in engendering them and loving them, and in teaching them to love and care about the world, parents are betting that life can be better for them and their progeny. I mean even if they are down now, I think Americans have this kind of idea that they are going to have a better life or they are going to try to create a better life.

So what we have are really two different trajectories between most of the advanced countries and the countries that will be advanced countries—even in China, you could divide eastern China from western China, and eastern China is already beginning to look more like Korea—and, on the other hand, the United States. Again, this is not an argument. You know, my mother-in-law is from France, my wife's family is divided between Quebec and France. I have no problem with European civilization. I love Amsterdam. I work in London. I'm just saying there are different trajectories.

In the European Union, Japan, and Korea, for instance, I think their challenge in the next 20 to 30 years is how do they deal with an aging population? How do they fill labor shortages, either through using robots or are they going to bring in immigrants? I think that may be a bit of a problem.

And a lot of it is going to be having to invest in growing economies, which is what, for instance, Great Britain did from the latter part of the 19th century until the Second World War, and even to this day British economic power is largely based on globalized investment flows that go in and out of London.

The United States has a different agenda, very different. Our sustainability as a society and an economy revolves around creating opportunities for an expanding population. Simply to keep up with population growth in 2010, the New America Foundation estimates the country needs about 125,000 jobs a month. So the question is: Are we going to take advantage of that, or are we going to have ever-growing unemployment?

I was astounded by the fact that the president was so slow to understand how important the unemployment problem was. As somebody who worked with Bill Clinton and the Democratic Leadership Council, it was just astounding that in this economy the president did not focus on this as the number one issue. That's why I think things have gone the way they've gone.

One of the things we can do to reach this job goal will be taking and encouraging entrepreneurship and the flexible business culture that we have. I think out of this recession, if you want to look back, you're going to see lots of people who have been laid off started new companies, running them in much more efficient ways. I think that this will be the kind of innovation that will make it happen for us. I think that has always been the way the United States has worked.

Now, you're saying, where do I see this dynamism? How can I have such a bizarre view?

Well, I think Washington, D.C.'s approach to the world is: "Things are horrible; give us more power;" or, "Things are horrible; let's get rid of the people who now have the power." That's what you get from Washington.

I spend a lot of time in communities, churches, with entrepreneurs and families, and I see a very different world than the one that you'll see at the universities. I'll give you an example of an amazing transformation. I have been going to the city of Fargo, North Dakota, for about ten to 15 years. When I first went there, downtown was terrible. It was in the middle of nowhere. The coffee was so bad I had to bring my coffee with me from L.A. You were completely cut off from the world. I mean you could get a dog-eared New York Times maybe three days late. You really felt like you were on a different planet.

You go there now, they've had a huge high-tech boom, they have obviously benefited from the commodity explosion, they have enormous amounts of energy in that state; you have immigrants moving in; you have a downtown that even has a store for metrosexuals. I mean it's really amazing what's happened.

One of the things that's happened is many of the amenities that had been exclusively in three, four, five cities, you can now find them there. You can now go and actually get a decent meal in Fargo, North Dakota. You could not do that 15 years ago, because people were moving out.

Or if you think about the suburban areas, if you go to Sugarland, which is just west of Houston, an enormous Hindu temple has been built there, where all the stones have been brought from India to Texas. It's just enormous. I mean this thing is huge.

Actually, if you look at where are the mosques and the Hindu temples and the new churches being built, they're mostly being built in places that most of the traveling class never sees.

I think that this immigration, in particular, is really critical. Between 1990 and 2005, the immigrants started one-quarter of all the venture-backed companies in the United States.

Large American firms have an international character to them. Fourteen of the CEOs of the 2007 Fortune 100 were immigrants.

And, of course, most of the stuff is really happening in terms of the grassroots. One of my favorite companies is the Cardenas Brothers. I write about them in the book.

They came from Mexico. They really had nothing. They started a business where they had a little farm on the outskirts of L.A. They would go to ethnic neighborhoods with pigs in the backseat of their truck and say, "Does anybody want fresh meat?" When they said, "Yes," they'd kick the pig out, they'd shoot it, and then they'd slaughter it right there. This is how they started. Today Cardenas Brothers is about a $300-400 million business. They now sell processed Mexican food using their mother's recipes to Costco.

This kind of thing is really happening, and mostly happening more on the outskirts of the cities than inside of the cities.

The other thing that's really interesting is that—I was just in Houston. I was talking to a friend of mine who has built a million-square-foot shopping center in Fort Worth, Texas. He is literally minting money. What he does—and I have to say I gave him the idea—is take old, rotting shopping centers and Hispanicize them. So what he does is they built a bull ring and a rodeo in these places, because they understood that for a lot of the Latin families going to the mall was the event of the week. They built the supermarkets with wide aisles so the whole family can go down. It's not like one of your little Gristedes, where you've got to hope that your pet ant is able to do it.

Anyway, this fellow, from Montreal as well but living in Houston, is doing very well. Just to show you how unfair the universe is, they also found natural gas underneath it.

Even in California, where the economy is not doing so great, there are now a whole series of new Asian shopping centers. I asked Dr. Alethea Hsu about what she did—"Oh, everybody pays in cash." For the Asian community she built a grand new shopping center in Irvine and leased it up immediately, in the midst of the recession. I asked her, "Why did you do this?" She said, "Because we have faith." I think that was also very important.

I think Americans in general are an entrepreneurial people. In 2008, 28 percent of Americans said they had considered starting a business, which is twice the rate for French and Germans.

Self-employment has been growing at twice the rate of population over what we saw in the mid-1990s. My colleagues in London do an international comparison, what they call the Prosperity Index, in which the United States ranked top in entrepreneurship and innovation. We ranked not so in the top in a lot of other areas, but in those areas we were pretty good.

I think we're going to see a real change in where we're going to get a lot of our entrepreneurial strength in the years ahead. I think a lot of it is going to come from our generation.

The retirement age—more and more Americans think they're going to live and work into their 70s and 80s. We have a less rigid system. And right now, according to the Calhoun Foundation, people in their 50s are already the most likely people to start new companies, either by necessity or by choice.

And then we go to the real key here, and that is really the Millennial Generation, that 1983-2003. They're actually a little bit bigger than the Baby Boomers.

Also, I love these things: "We're not going to have any demand for housing because the Boomers are all going to get old." And then, of course, they all thought everyone was going to move back into the middle of the city, which of course didn't happen, and you can see a lot of what happened to the condo market. But they're always saying, "The Boomers will do this."

I said, "But you know what? There's another group of people. They're actually real." You know, Boomers are really the most self-obsessed generation probably in history, and they think the world comes to en end when they come to an end. Well, you know, I don't think that's going to happen.

I think this next generation is going to really start having a big impact.

It's very interesting when you look at who are these young people, what are they doing. They're very family- and community-oriented.

They actually like their parents, which is us, which is hard to believe. The relationship between children today and their parents and our generation and our parents is really different. There was much, much, much more conflict in the 1960s and early 1970s between parents and children.

I'm always amazed at how—I ask my kids at Chapman. I say, "How often do you talk to your parents?"

Most of them say, "Two or three times a week." They're texting every day. They're Facebooking with Mom. I mean it's really a different thing.

The poll data will show you really different attitudes. If you ask them, "What do you do if you have a problem?" they go to their parents. Now, given the quality of our advice, that could be a problem.

One other huge change—and, although I have some problems with what President Obama has done, I think he's a great example of this—is the fact that the attitudes of Americans on race are changing. Among the young it's particularly interesting.

The 2006 Gallup Poll showed that 95 percent of young people 18-29 approved of interracial dating—I guess it was all those white guys who wanted to go out with Beyonce—compared to 45 percent of people over 65. And, as we know, dating has consequences. So we're going to see a huge growth in the mixed-race population.

People tend to forget that President Obama is mixed race. Remember, when he first started running, his support was really among college-educated whites. African-Americans were not the first group to rally to his cause.

I think this is very illustrative of a very different kind of ethnic politics in America, which I'm fairly hopeful about.

And the integration of immigrants into the political system, which is actually happening in some ways faster than it did in the previous generations.

If you spend time in foreign countries, of course, as you well know, Korea, China, and Japan are not particularly immigrant-friendly. But I've been surprised—and one of my biggest clients has been in Denmark—at what's happening in Sweden, Denmark, and the Netherlands, in terms of the anti-immigrant feelings there.

They just banned the construction of minarets in Switzerland—you know, think about a country that is very dependent on its global role—and France has considered banning head scarves and other Islamic garb.

But take a political comparison. The United States now has an African-American president of mixed race, very powerful Latino and African-American lobbies and caucuses in the U.S. Congress. France has elected only three minority members out of the 555 in its National Assembly. That's quite a contrast.

Obviously, the Asian countries are even more resistant to any kind of cultural diversity. It is going to be a very difficult question what they're going to do when they have labor shortage problems, and of course when they start having women shortages. It's going to be like a giant boys' school or something.

There's a recent incident that is really interesting that somebody sent me from China. A woman who had had an affair with an African-American man had a mixed-race daughter, a very beautiful girl. She had Chinese characteristics on her face, but she was dark. So she was in one of those American Idol or Chinese Idol things. The invective that was on the Chinese media about this, and the anger about this mixed-race kid, was pretty shocking.

So I think in that case the idea of America as a multiracial superpower, as a place with connections to all sorts of countries, a reputation for being a relatively open society—not just being open like my Scandinavian friends, who are always the biggest liberals until somebody of a different color moves next door—I think it's quite an amazing future.

I think then the question people will have, and people on the left and right ask this, is: What's going to hold the country together? We're so diverse.

Ultimately, I think it is what makes the United States a unique place.

The British writer G.K. Chesterton once put it that the United States was the only nation that is founded on a creed. Now, that is not necessarily a religious faith. It's about a very different raison d'être for the country. This is a country that is not a nation in the sense of we all can trace our roots back for 300 to 400 years. A huge percentage of the population is made up now of people who came here since 1970. Certainly, the majority of the population is 1880s vintage and on. So I think what we're really looking at is a country that has based itself on a national creed.

How do we meet all these challenges? I think, obviously, government has some role here, as well as community organizations. We have to have policies that encourage sustainable enterprise and growth.

And we need massive new infrastructure investment. That was my biggest problem with the Obama stimulus, how little of it actually went into anything that was a major infrastructure investment.

Americans, if you think of our history, we created the canals, the railways, the roads, the ports, dams, telecommunication systems, and energy systems. We need to find that kind of imagination again, the very imagination that drove the space program and the establishment of the Internet.

But as much as I do think government policy is important, I think the future will be created mostly by localities, by families, by individuals, by communities. I think that's the very essence of what America is about.

Ralph Waldo Emerson, writing about the equally interesting changes of his time, said: "The age has an engine but no engineer." I think you can say the same about our future.

So our future will not be some president, some Congress, saying, "Here's the future, I'm going to lay it down." It's going to be something very different.

So if we go to the next 40 years, I think we're going to see something very different emerge, and that the key part of it is going to be what happens in what Jefferson called our "little republics"—those communities, those churches, those local associations, those neighborhoods. That's, I think, where we'll find our sustenance and our best hope for the future.

Thank you.

Questions and Answers

QUESTION: That was fascinating, but I'm going to challenge some things.

JOEL KOTKIN: Good.

QUESTIONER: While it's true that our country grew as a result of this great innovation that we've had over the years in America, I think we're going on a wrong path lately. With corporations largely unregulated, with antitrust not at all on the scene anymore, we have corporations that are in fact providing the material and regulating and distributing it, which sounds like corporate communism. It's a really sad state of affairs when actually—who are the independent workers, the farmers? Are there any farms anymore, independent farms? They're all agri-farms. Everything is being controlled more and more, and it seems to me that's what we have to be looking at today.

JOEL KOTKIN: First of all, there are a lot of farmers. The vast majority of the food in America is grown by family-owned farms. I think some of them are quite large.

I do a lot of work in agriculture. They are actually usually family companies, particularly in the middle part of the country, but in other parts, in California too mostly. I have quite a few clients who are in the Salinas Valley, and the vast majority of them are family companies, and very often family companies of founders who actually came to the Valley in the 1920s and 1930s.

I agree with you completely about the lack of regulation. I thought the repeal of Glass-Steagall was a major mistake. I've been very supportive of that sort of change. I think that you cannot expect too much responsibility from companies because they're in business to make money. So there has to be some sort of framework.

For instance, I think that President Obama, frankly, has been too light on the banks and too light on the big institutions and not thinking about how to stimulate new businesses. I think he is now a little bit flailing, trying to figure out some other message, because what he was doing—and I have to say from early on I have been writing about that, that you've got to focus on the economy, you've got to figure out where jobs are going to be.

I think they really thought that if they stabilized the big banks, that would stabilize everything else. And it did. You got a big boost in the stock market; you had a 30-40 percent increase in the stock market. But that didn't create jobs.

So I agree with many of those things. In a funny way, my optimism and my feeling about the next generation make me more radical about how we get to where we need to go.

What's interesting with agriculture—not that I'm here in Manhattan talking about agriculture—but the interesting thing about agriculture is for a long time farms were getting bigger, and now actually there are more small farms being started. So some interesting changes in what's happening.

There is much more diversity in agriculture. Being in California and working with California farmers, who I think are the most innovative maybe in the world, we are seeing a lot more independents, small, servicing local communities, servicing local niches. So I think there are some optimistic things about that.

QUESTION: Sam Huntington feared the growth of Hispanic immigrants, I guess because they wouldn't assimilate, as he said. At the same time, the Mexican birth rate is approaching the United States' birth rate. So let's have a comment on that.

JOEL KOTKIN: In the project I'm working on now on global cities, I'm doing three cities—Mumbai, London, and Mexico City—so I've been looking a lot at Mexico. Obviously, what happens is once a country gets more education and becomes denser, more urbanized, the birth rate starts to drop. And, of course, the technology of not having children also makes it possible.

You know, I love Huntington's work. I think he was a genius. I thought that many of the things he said were right. But I think he needed to go to a Hispanic shopping center and I think he would wake up and see that it's very different.

Here are some basic numbers. By the second generation, only 10 percent of the kids speak Spanish as their primary language. They are acquiring English about as quickly, if not more quickly, than other groups.

Now, there is some tendency to hold on to Spanish, particularly on the border, because you hear it. But, then again, I hold on to Spanish. I find myself sometimes thinking of something in Spanish, even though I'm not a great Spanish speaker, because I'm surrounded by that, it's a nearby culture.

And there are some differences in general. People can get TV from their home countries. You know, when a Norwegian immigrant moved to Minnesota in 1850, once those Norwegian-speaking institutions died, there was no way they were going to stay in touch. They weren't going to hop on a plane and fly to Oslo. So I think it is a little bit different.

But if you look at Latino-Americans or Mexican-Americans, there are a very high number in the armed services, many now in the absolute top of the U.S. military. I don't know. That doesn't seem like you're not blending in.

I see more of an integration of their culture into the American culture. American culture is always changing. I am sure that Henry James would be very shocked to see bagels on your table. When my kids say they want a steak, both of them say, "Are we having carne asada?" They are in this sort of culture.

I think the wonderful thing about America has been its ability to adjust its culture over time.

By the third generation, the vast majority of the kids speak no Spanish. That is in some ways too bad, just like I wish my father had spoken Russian with me and that would have been nice. But the fact of the matter is, the idea that Hispanic Americans are not going to integrate is ridiculous.

If you look at the idea that somewhere around 60-70 percent of the people in Mexico still want to emigrate to the United States—you know, it just seems to me a little bit off.

What you do see is a blending. I was talking about my friend's shopping center in Fort Worth, Texas. What you see in that shopping center is now a lot of Anglos and African-Americans go to those shopping centers because they're more fun than a mall owned by Westfield or one of the big chains.

I have always found that whole argument—and living in Los Angeles, a city that's 40-50 percent Hispanic, working in a state in which Hispanics will be probably the majority by 2050, and yet I see more and more integration, more and more leaders coming up from the Latin community.

Many of the cities I work in are majority Latino. I don't work in boutique cities; I work in working-class cities. I'm really very much not worried about that at all.

QUESTION: While I agree with most, if not all, of the things you say about the United States' competitive advantages, can you address a couple of things? There is, it seems, a market failure, a significant market failure, with respect to the efficient allocation of both talent and money to the kinds of enterprises you're talking about. If you go to a major college, you will see the top ten, the top 20, the top 100 people all wanting to work in finance to pay off their loans, and you will see the banks, or you have seen the banks, in the last five or ten years investing money in exotic instruments and different tranches of exotic instruments, rather than the kind of enterprises you describe. Now, how can you address this kind of problem with respect to the future, because all the promise is there but the resources don't seem to be allocated efficiently?

JOEL KOTKIN: Well, I couldn't agree more. I don't know if you're an attorney, but you left out the lawyers as well. I mean every time I see a bright young person saying they're going to go to law school, I feel like crying. You know, what a waste.

But I think people respond to market signals. I think most people feel that the finance sector in America is going to lose its percentage of the national income over the next five to ten years. If that happens, there will be more money put elsewhere.

But I agree. I'm not a policy wonk; I didn't write a policy book. But I think if we made some of the reforms we talked about earlier, in terms of Glass-Steagall and encouraging investment in growing enterprises, I think there would be some advantages.

Now, I also think that at the same time the enormous returns that a small group of people in the financial sector get will not be there. I'll tell you something, and this will seem like a tangent, but it really isn't. I'm studying London now and the U.K. If you want to see how we can go wrong, it's a great place to go, because if you look at the United Kingdom, most of their industrial base is pretty much gone. The entire economy—like New York to some extent— runs on the casino, the City of London. They really are going to have a lot of trouble trying to make any reforms there. They have become totally dependent on that.

What has happened is the class stratification, which has always been a problem there, is particularly bad. I spent a lot of time looking into the issue of white working-class England. White working-class England is in bad shape. It is in much worse shape than most of the immigrant communities. The West Indians have gone a lot into the bureaucracy, into small business. The same thing is true particularly with the Hindus. The white working class that you have just huge numbers of people—if you walk around the not-so-nice parts of London, you'll see—my image is the yob with shaved head, tattoo, cigarette, drinking beer at 3 o'clock in the afternoon.

We don't see that that much in the United States today. If we don't make the kinds of changes you're suggesting, that could be. I've thought about writing a piece called "The Yobization of the American Working Class." It could happen if the next generation of young people come out of school and there is no opportunity for them.

And on the issue of education, I'll talk about misallocation. This is something I find really interesting. Every business group, when I talk to them and I listen to what they say, they think the biggest problem is not enough skills training. We're not teaching people to be plumbers, mechanics. I mean if it hadn't been for the immigrants, I don't think anything would get built in this country anymore.

There are all these kids who want to learn skills that would actually provide an income and would be for work on the productive side of the economy. I think personally we are steering too many people into four-year colleges for jobs that really don't exist. Let's face it, what's the future of a Cal State graduate in Chicano studies? We used to say, to show how old I am, in New York "that and a subway token will get you a ride on the subway." I mean it's just ridiculous.

I talk from personal experience. In Salinas, the junior college was pushing all these kids into the four-year programs—and they weren't that interested, they weren't oriented that way. Meanwhile, the farm industry, which is the basis of the whole economy, was saying, "We can't find irrigation people, we can't find people to fix the tractors, we can't find people to manage the crop rotations"—whatever it was. And so we were able to turn the school around and get an agricultural technology program reinstated there.

I think those are the kinds of changes that we really have to make. And as anyone knows, sometimes being a plumber is better than being a doctor.

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